Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
If You Don’t Understand Bonds, You Don’t Understand Investing - 25th Aug 19
Gold's Next Move - 25th Aug 19
Fresh Water Crisis Unfolding - 25th Aug 19
Newbie Guide to Currency Pairs in Forex Trading – Review - 25th Aug 19
When A 16-Year-Old Earns $3 Million, You Know It's Not A 'Silly Fad' - 24th Aug 19
The Central Bank Time Machine - 23rd Aug 19
Stock Market August Breakdown Prediction and Analysis - 23rd Aug 19
U.S. To “Drown The World” In Oil - 23rd Aug 19
Modern Monetary Theory Could Destroy America - 23rd Aug 19
Seven Key Words That Explain "Stupidly High" Bond Market Prices - 23rd Aug 19
Is the Fed Too Late Prevent A US Housing Bear Market? - 23rd Aug 19
Manchester Airport FREE Drop Off Area Service at JetParks 1 - Video - 23rd Aug 19
Gold Price Trend Validation - 22nd Aug 19
Economist Lays Out the Next Step to Wonderland for the Fed - 22nd Aug 19
GCSE Exam Results Day Shock! How to Get 9 A*'s Grade 9's in England and Maths - 22nd Aug 19
KEY WEEK FOR US MARKETS, GOLD, AND OIL - Audio Analysis - 22nd Aug 19
USD/JPY, USD/CHF, GBP/USD Currency Pairs to Watch Prior to FOMC Minutes and Jackson Hole - 22nd Aug 19
Fed Too Late To Prevent US Real Estate Market Crash? - 22nd Aug 19
Retail Sector Isn’t Dead. It’s Growing and Pays 6%+ Dividends - 22nd Aug 19
FREE Access EWI's Financial Market Forecasting Service - 22nd Aug 19
Benefits of Acrobits Softphone - 22nd Aug 19
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Is the U.S. Dollar and Stock Market Ready to Crash?

Stock-Markets / Stock Markets 2014 Aug 20, 2014 - 02:28 PM GMT

By: Money_Morning

Stock-Markets

As the yearly end of summer doldrums engulf the Hamptons, the uber-wealthy position themselves for a rocky coming storm when the robust fall trading season begins. Some of the most memorable major equity collapses happen during this time of year. Logic, fundamentals and sound business analysis has very little to do in forecasting when the actual plug will be pulled on the rocket ride in stocks. In a rigid game, the house always knows when and at what time the fleecing of the mark happens. Such timing projections do not apply to the decline in the purchasing power of the dollar. More appropriately, Federal Reserve Notes are only compulsory money because of the legal tender laws. Yet, financial instruments are gauged in terms of their worth by the dollar redemption value they produce.

In a short and concise account, ZeroHedge nails this one front and center, Why The Fed Can't, And Won't, Let The Stock Market Crash.

"The illusion of wealth is now most critical when preserving the myth of the welfare state: some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys . . . The only lifeline left is pushing pension funds out of their existing asset allocation sweet spot and forcing them to buy stocks. Whether this gambit will work is unknown."

Will the Fed be able to avoid a market crash?

The answer of course is no. But, while we have explained countless times why central-planning always fails in the end, we will give the podium to Fred Hickey, aka the High-Tech Strategist, who gives a very poetic summary of what the Fed's endgame will look like:

"The Fed hasn't made the world a better place with its interventions. It has created moral hazard, encouraged the formation of asset bubbles that eventually pop (leaving economic messes), widened the wealth inequality gap to record levels, discouraged savings and investment, severely penalized retirees on fixed incomes, encouraged spending, funded massive government deficit spending by monetizing the debts, lengthened the recession and likely reduced the number of jobs that would have been created if the economy had been allowed to take its normal course. Eventually the Fed's policy interventions will also have created debilitating, widespread consumer inflation, the "cruelest tax" against the poor and middle classes."

Well, there you have it. This is the worst economic Catch 22 in memory. Any astute and honest breakdown of these circumstances must conclude that the conditions, that have brought the once greatest economic wealth creation engine to an abrupt seizure, are self-induced to aggrandize a select cabal of global elites.

So when will the joy ride end? For ordinary consumers the easy money train hit a brick wall with the 2008 financial meltdown. Not so, for the insiders who took corporate welfare and low equity prices to their smashing advantage. No other manufactured bubble has been more profitable for the royalty of Wall Street since the great depression.

The recent disclosure that "Soros Put" Rises To Record: Is The Billionaire Investor Betting On Market Crash? - raises a red flag.

"The "Soros put" is a legacy hedge position that the 84-year old has been rolling over every quarter since 2010. Since this was an increase of 638% Q/Q this has some people concerned that the author of 'reflexivity' and the founder of "open societies" may be anticipating some major market downside.

Furthermore, remember that what was disclosed yesterday is a snapshot of Soros' holdings as of 45 days ago. What he may or may not have done with his hedge since then is largely unknown, and since there are no investor letters, there is no way of knowing even on a leaked basis how the billionaire has since positioned for the market.

Then again, considering that not only Yellen, who has warned about bubble pockets in stocks, but the BIS, Icahn and numerous other fund managers, now openly warn that the entire market has entered bubble territory, perhaps this is a case where the simplest explanation is also the right one... "

Is this just hype or should prudent people go to cash for protection from the next round of financial implosion? The answer may surprise most investors.

Stock pricings have little to do with the economic strengths, performance and future projections of the underlying businesses. Capital markets no longer serve their intended purposes of raising money to fund the operations of productive businesses. Equity downturns, turn into panics when central banksters and government planners need to create financial chaos to interject their newest consolidation system schemes.

A truly free market in commerce, much less in finance, does not exist. The dollar is not a real medium of exchange, but functions as mandatory barter vehicle for a captured society. Convertible rates of exchange with foreign currencies are more a result of political dynamics, than economic equilibrium.

When do you know that a bubble is ripe for a blow? Forbes gives you the high sign, $38 Million Ferrari Becomes The World's Most Valuable Car, Yet Its Auction Price Disappoints. Gee, such sorrow over such a fire sale price.

Maybe you should heed the warning when, Billionaires Dumping Stocks, Economist Knows Why, which reported that, "It’s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%." Wow, spin that projection into a mere correction in an overheated market. Just maybe a 1962 Ferrari 250 GTO is not such a bad ride after all.

Remember you need cash to pay taxes. For those unlucky enough collecting government pension checks, you will get no sympathy if your retirement goes up in flames. Being a career enabler of a fraudulent political dynasty that destroyed entrepreneurship and the merchant economy deserves to be on poverty row with the rest of the country. The crash for a shrinking middle class has already occurred. Rest assured, Forbes reported, "The ranks of the world’s billionaires have swelled to a record 1,645 including 268 newcomers", will not be feeling your pain.

James Hall – August 20, 2014

Source: http://batr.org/negotium/082014.html

Discuss or comment about this essay on the BATR Forum

http://www.batr.org

"Many seek to become a Syndicated Columnist, while the few strive to be a Vindicated Publisher"

© 2014 Copyright BATR - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors

BATR Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules